Wednesday, July 17, 2013

Baidu buys Chinese appstore for $1.9B

In a statement released Tuesday, the Chinese leading search
engine said it had agreed to purchase the 57.41 percent stake owned by Chinese
game developer NetDragon Websoft, as well as all remaining equity interests
from other shareholders of 91 Wireless. Established in 2007, the appstore is
the top third-party app distribution platform in China based on active users as
well as downloads, the company said, citing 2011-2012 stats from iResearch.

The move would help boost Baidu's gameplay in China's mobile
market, according to market watchers. In an e-mail to ZDNet, Forrester
Research's Beijing-based analyst Wang Xiaofeng described the acquisition as a
"smart move" as it will help assure Baidu's competitiveness in the
age of mobile Internet.She said China's mobile Internet population will reach
600 million by 2016, and 91 Wireless' strength in mobile apps will be a great
complement to Baidu's current business. "It will act as a powerful
distribution channel for Baidu's own apps," Wang said.

She explained that mobile Internet was unlike PC-based
Internet. "[On desktops], search engine is the key channel to drive traffic,
and Baidu is the dominant search engine in China. For mobile Internet, users
can find information via a browser-based search engine or through a myriad of
discrete apps."Thus, the strength Baidu has online won't necessarily
translate to mobile. The investment on 91 Wireless will help Baidu greatly for
competing with Ali and Tencent," she noted.

Elinor Leung, a Hong Kong-based analyst with CLSA, said in a
report by Reuters, the acquisition would allow the company to work more closely
with apps developers and further improve its search capabilities.

Citing Andy Yeung, an analyst at Oppenheimer & Co, a
Bloomberg report said: "Baidu is not as well established in the mobile
Internet space as the desktop Internet space. It's a complementary strategy to
enhance Baidu's status in the mobile ecosystem."

Kaiser Kuo, a Beijing-based spokesperson for Baidu, said in
the report: "Mobile appstores are an important entry point to the mobile
Internet and are, therefore, of great strategic interest to Baidu." According
to figures from China Internet Network Information Center, there were over 420
million mobile Web users in the country as of end-December 2012, up 64.4
million from 2011. Among all Internet users in China, 74.5 percent accessed the
Web via their mobile phones in 2012 compared to 69.3 percent in the year
before.